CMS Voluntary Self-Referral Disclosure Protocol: How it works, and when to utilize it, Kentuckydoc November 2010, Volume 2, Issue 4

Attorneys

Let's say you are a radiologist employed by City Imaging, PLLC, to act as its medical director. In addition to your duties with City Imaging, you maintain a busy private practice and sometimes refer your patients to City Imaging to receive MRI scans. Being a well-informed, conscientious doctor, you made sure that your personal services contract with City Imaging complied with all of the statutory and regulatory requirements of the Stark Law ("Stark"). Now imagine that your contract was misplaced in the reams of paper coming in and out of the center every day before City Imaging's owner could sign it, and that you have been referring patients to the center for months. Your blood runs cold as thoughts of repayment, five-figure penalties per service provided in violation of Stark, and False Claims Act liability race through your frantic mind. What if there was a way to potentially reduce those penalties?

Luckily there is. The Voluntary Self-Referral Disclosure Protocol ("Disclosure Protocol")², issued pursuant to the Patient Protection and Affordable Care Act by the United States Centers for Medicare and Medicaid Services ("CMS") on September 23, 2009, gives physicians in similar predicaments the opportunity to mitigate liability for Stark violations. It is important for physicians to understand how the Disclosure Protocol works and what its potential benefits are.

Stark forbids a physician who has a financial relationship with an entity from referring patients to that entity for designated health services for which a federal health care program may pay.³ Covered financial relationships include ownership and investment interests as well as compensation arrangements between the physician (or an immediate family member of the physician) and the entity. 4 Importantly, Stark is a strict liability statute, meaning that a physician's intent is irrelevant when considering whether the statute has been violated, so innocent violations will result in penalties.

While any actual or potential violation of Stark — from the innocent mistake in the scenario described above to a multi-year scheme to intentionally defraud Medicare — may be disclosed, the Disclosure Protocol allows CMS wide altitude in determining whether a disclosure will result in reduced penalties. Specifically, in determining whether to reduce penalties, CMS will consider:

The nature and extent of the improper or illegal practice;

The timeliness of the self-disclosure;

The cooperation in providing additional information related to the disclosure;

The litigation risk associated with the matter disclosed; and

The financial position of the disclosing party. 5

While no reduction is guaranteed, the potential of a reduction in penalties may be attractive because the financial consequences of a violation of Stark can accumulate quickly. Stark empowers the government to access a five-figure penalty in certain instances and, in all instances, to require a repayment of amounts billed for services provided in violation of Stark. Further, the Patient Protection and Affordable Care Act requires providers to report and return overpayments within 60 days after the date on which the overpayment is identified. 6 Further, the Patient Protection and Affordable Care Act requires providers to report and return overpayments within 60 days after the date on which the overpayment is identified. 7 Failure to do so is ground for liability under the False Claims Act, which itself contains potential five-figure penalties per false claim and the possibility for treble damages. 8 If a physician complies with the Disclosure Protocol, CMS will suspend the 60-day deadline until a settlement agreement is entered. 9

To self-disclose an actual or potential violation of Stark, the physician must provide the following information to CMS:

The name, address, provider number, CMS certification number and tax identification number of the disclosing party;

A description of the nature of the matter being disclosed, including the type of financial relationships, the parties involved, the specific time periods involved and the type of claims at issue;

A statement from the disclosing party regarding why he or she believes Stark has been violated, including a complete legal analysis of the applicability of Stark and its exceptions that may apply to any part of the disclosed conduct, and a discussion of the causes of the violation;

The circumstances leading to the discovery of the disclosed matter and the measure taken to address the underlying issues;

A statement identifying whether the disclosing party has a history of similar conduct, or any prior enforcement actions against it;

A description of the existence and adequacy of a pre-existing compliance program used by the disclosing party, a description of any measures of actions taken by the disclosing party to restructure the non-compliant relationship;

A description of appropriate notices provided to other government agencies in connection with the disclosed matter; and

An indication of whether the disclosing party has knowledge that the matter is under current inquiry by a government agency or contractor. 10

The disclosing party must also conduct a thorough financial analysis consisting of the total amount, itemized by year, actually or potentially owed to the government, the methodology used to arrive at this total, and a summary of the documents relied upon. The disclosing party must then certify that the information contained in the disclosure, to the best of his or her knowledge, contains truthful information and is based on a good-faith effort to resolve potential liability. 11

Once a physician submits a complete disclosure, CMS will verify the information contained in it. This process may require CMS to go beyond the information submitted by the disclosing party, and the Disclosure Protocol requires the disclosing party to grant CMS access to all of his or her documentation, with the exception of privileged material. 12 Because the Disclosure Protocol is so new, it is unclear exactly how long this process will take.

Finally, there are two circumstances that affect the manner in which a physician should disclose a violation of Stark. If the conduct to be disclosed could constitute a violation of the Anti-Kickback Statute, found at 42 U.S.C. § 1320a-7b (b) (prohibiting the knowing and willful solicitation or receipt of any remuneration, in cash or in kind, in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service that may be paid for under a federal health care program), the disclosing party should use The Office of Inspector General's Self-Disclosure Protocol to disclose his or her actual or potential violations of both Stark and the Anti-Kickback Statute. 13 Further, if the disclosing party is already under a corporate integrity agreement with CMS, he or she should disclose pursuant to both that agreement and the Disclosure Protocol. 14

In conclusion, CMS' Voluntary Self-Referral Disclosure Protocol may be an attractive option to consider when faced with an actual or potential violation of Stark.

Sources

1 The statutory text of Stark may be found at 42 U.S.C. § 1395nn and the regulations promulgated pursuant to Stark may be found at 42 C.F.R. § 411.350, et seq.

2 The Disclosure Protocol may be accessed at https://www.cms.gov/PhysicianSelfReferral/Downloads/6409_SRDP_Protocol.pdf

3 See 42 U.S.C. § 1395nn(a).

4 See id. at (a) (2).

5 Disclosure Protocol, p. 6

6 See 42 U.S.C. § 1395nn(g).

7 See § H.R. 3590, § 6409 (d) (2).

8 See 31 U.S.C. § 3729 (a).

9 Disclosure Protocol, P. 1.

10 Disclosure Protocol, pp. 3-4.

11 Disclosure Protocol, pp. 4-5.

12 Disclosure Protocol, p. 5.

13 Disclosure Protocol, p. 2; see also OIG Self-Disclosure Protocol.

14 Disclosure Protocol, p. 3.

About the Authors

Lisa English Hinkle, partner of the Lexington office, also contributed to this article and can be reached atlhinkle@mmlk.com or 859-231-8780.

This article is intended to be a summary of newly enacted federal policy and does not constitute, nor should it be construed to constitute, as legal advice.